Page 13 - What You Need to Know to Find the Right Builder

could be money in the agent’s pocket if they send a client to that builder. Not all

agents and builders have this set up, but it does happen, so you’re better off
putting more weight behind the referrals of former clients and trusting your own
eyes, than anything else.

Cheaper does not mean better.

Don’t pick a builder just because they claim to be the cheapest option.

Remember the adage “you get what you pay for”? Cheaper usually means
inferior. While the upfront contract price may be lower than another builder’s,
how accurate is it? The Quality Home Builder will take the time to price your
project right down to the number of 2x4’s and nails needed. They will get fixed

pricing from the subcontractors such as heat, electrical, plumbing, and
foundation, so there would be little to no chance of cost overruns. An accurate
proposal can take 80 hours or more of phone calls, emails, meetings, etc.

Beware! If a builder is just giving you an estimate, then it’s just that, an
estimate, based on a guess of what they expect the project to cost. Often, they
will low-ball this number and then have a clause in the contract that states “not to

exceed 20% of contract amount”. If you’re building a $300,000 home, that 20%
adds up to a shocking $60,000 that the client would be responsible for in the end.
The quality builder would have already known the exact cost to build and would
offer a firm “proposal” to draft the contract by, right from the beginning. There

should be little to no unexpected overruns.

Another way a bad builder comes in lower than a quality builder is in
allowance items. Often a contract will be open ended to a degree when it comes

to items like flooring choices, cabinet choices, lighting fixture choices, etc. It’s
difficult to pick out everything that a client may want to include in their home at
the time of the contract, so builders often call these items allowances. Having

allowances means that the client is given a budget to pay for those items.
Accurate allowances are crucial in avoiding huge overruns. Some builders low-ball
this number to make the contract price seem low at first, but down the road

when the client starts to make the selections, they’re either limited to low end
products, or they go over budget. The client ends up on the hook for the actual

12